JobsOhio passes final hurdle, but questions remain

Tuesday

Jan 31, 2012 at 12:01 AMJan 31, 2012 at 11:09 AM

The Kasich administration's decision to keep secret how it will determine whether Ohioans are getting a good deal from the $100?million a year that JobsOhio will spend on economic development did not stop the state Controlling Board from approving the contracts to formally get the privatized entity going yesterday.

Jim Siegel, The Columbus Dispatch

The Kasich administration’s decision to keep secret how it will determine whether Ohioans are getting a good deal from the $100?million a year that JobsOhio will spend on economic development did not stop the state Controlling Board from approving the contracts to formally get the privatized entity going yesterday.

“Today we’re taking the next big step in a pretty significant change in how we’ve been dealing with economic development here in the state,” said Rep. Jay Hottinger, R-Newark. “Everyone agrees the status quo just clearly wasn’t sufficient.”

But Hottinger and his fellow legislators on the bipartisan spending-oversight board questioned the heads of the state Development and Commerce departments for nearly an hour yesterday about JobsOhio. When members of the panel asked what kind of results are expected, the answers were not clear.

“We do not yet have those goals solidified,” said Ohio Department of Development Director Christiane Schmenk. “We just started to review that with them.”

Schmenk said she expects to see a draft of the JobsOhio strategic plan by March 1.

Sen. Tom Sawyer, D-Akron, questioned how taxpayers are supposed to know whether they are getting a good deal if JobsOhio will not disclose the criteria it is using to determine a positive return on investment. The Kasich administration is keeping the formula private, arguing that it is a trade secret.

The calculations “typically involve information that has been always protected in these types of incentives,” Schmenk said, calling it a “competitive asset that other states may try to use if it was fully disclosed.”

“I guess I can understand that,” said Rep. Ron Amstutz, R-Wooster. “Can members of the General Assembly at least find out what the output is when it’s run, and what the general parameters are that you want in return of some size over some period of time?”

Schmenk said she will meet with Amstutz about it. “We do look for how quickly, for example, there is a net positive return to the state so the payroll the state is receiving exceeds the amount of incentives that were offered. The goal is to have that positive effect in a shorter time period.”

After the meeting, Amstutz, chairman of the powerful House Finance Committee, said questions remain.

“I don’t understand yet where the firewall is on what we’re going to have for data, and what we're not,” he said. “I have more questions about the parameters they’re setting it up with, in terms of getting short-term gains and not looking at the long term.”

JobsOhio will report to legislators on its activities once a year. “We know that transparency is going to be very, very important to the success of this new model,” Schmenk said.

JobsOhio will pay the state $1.4 billion for the rights to Ohio’s wholesale liquor profits for the next 25 years. The deal is expected to leave the entity about $100 million a year for economic development, and initial plans are to create loan packages on top of what the state offers.

After the meeting, Schmenk said she expected to formally sign the deal with JobsOhio by the end of the day, turning over the state’s “frontline economic-development work.” Work on the new entity, and its new coordination with six regional partners, including Columbus 2020, has been going on for months.

The Controlling Board also approved $2.8 million for transition expenses and for JobsOhio to help administer department loans. While JobsOhio will have its own $100 million to spend, Schmenk said, the entity will still need state approval before issuing tax credits or what are known as 166 Loans, which help businesses with land, building and equipment purchases.

Rep. Clayton Luckie, D-Dayton, was the only board member to vote against the contract, saying a lot of questions remain about how the money will be used. He said he’s also concerned that if not enough liquor money comes in, liquor prices could be raised.

jsiegel@dispatch.com

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